AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 273
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A) failed to consider that reassessment proceedings cannot be initiated. a. No reassessment can be made just to make an enquiry or verification, b. Reassessment proceedings cannot be initiate merely on the information received from investigation wing. c. Reassessment proceeding cannot be initiated when the LD. CIT(A) have reason to suspect and not reason to believe. 3. On the Facts and circumstances of case and law the Ld CIT(A) erred in confirming the assessment order under section 143 sub section 3 r w s 147 of income tax Act which is passed against the principal of natural justice. 4. The Ld CIT(A) erred in confirming and rejecting the books of accounts under section 145 of the. Income Tax Act. 5. The Ld CIT(A) erred in confirming and treating Rs. 42,05,6507- being 12.5 percent of the total purchases of Rs. 3,36,45,1977- as bogus non-genuine expenditure and thereby erred in adding the same to the total income of the assessee in view of section 69C of the Income Tax Act, 1961. 6. The Ld. CIT(A) erred in confirming the disallowance of unsecured loans taken of Rs. 1,50.00,000/- and thereby erred in confirming and treating the same as unexplained cash credits in view ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee carried the matter in appeal before the first appellate authority for all assessment years under consideration. The Ld.CIT(A), for the detailed reasons recorded in his appellate order, concurred with the finding of facts recorded by the AO while confirming addition made towards 12.5% profit on alleged bogus purchases and also addition towards unsecured loan taken from firms and companies controlled by Shri Bhanwarlal Jain group and associates. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before us. 5. The first issue that came up for our consideration from these appeals is addition towards 12.5% profit on alleged bogus purchases from Shri Bhanwarlal Jain group of companies. During the course of assessment proceedings, the AO noticed that the assessee is one of the beneficiaries of accommodation entries provided by two firms, viz. M/s Daksha Diamonds & M/s Money Diam. In order to ascertain correctness of purchases claimed to have made from above two concerns, the AO called upon the assessee to furnish necessary details including supporting evidence to justify purchases. In response, the assessee has filed complete details of purchases including purchase b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ove referred party were duly supported by bills and payments for such purchases have been made by account payee cheques, which are supported by bank statements. The AO, neither made out a case of any discrepancy in books of account nor sales made outside the books of account. The AO also failed to make out a case of return of cash back from the party to arrive at a conclusion that the assessee has rerouted its own unaccounted income in form of bogus purchases. In absence of any adverse comments on books of account, no addition could be made towards purchases from above two concerns only on the basis of statement of Shri Bhanwarlal Jain, when such statement has been retracted by the person, who gave the statement. In this regard, he has relied upon various judicial precedents including the decision of ITAT, Mumbai Bench in the case of Shri Ganpatrai A Sanghvi vs ACIT in ITA No.2826/Mum/2013. 7. The Ld.DR, on the other hand, strongly supported the orders of Ld.CIT(A) and submitted that the assessee failed to contradict the findings of facts recorded by the AO as well as the Ld.CIT(A) in light of facts brought out by department during search in Shri Bhanwarlal Jain group where it was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income / money belonged to the beneficiaries. In this case, the facts brought out by the AO during the course of assessment proceedings coupled with information gathered during search has strengthened the finding of the AO to come to the conclusion that these are accommodation entries issued by companies controlled by Shri Bhanwarlal Jain. Therefore, we reject the argument of the assessee that purchases are supported by necessary evidence. 9. Having said so, let us examine the percentage of profit determined by the AO. The AO has estimated 12.5% profit on alleged bogus purchases from two concerns belonging to Shri Bhanwarlal Jain. The AO has come to the conclusion that only profit needs to be estimated because the assessee has made out a case of correctness in books of account by filing complete stock details. Therefore, considering the fact that sales are not doubted and also there is no mismatch between quantity of goods purchased and sold, the AO has estimated fair amount of profit by considering various parameters including amount of VAT applicable to the goods and also the probable percentage of amount saved by the assessee by obtaining accommodation entries. Keeping these fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act remains that the assessee is one of the beneficiaries of accommodation entries provided by Shri Bhanwarlal Jain which is further evidenced from the fact that during search in case of Shri Bhanwarlal Jain, the department has found out parallel books of account maintained by Shri Bhanwarlal Jain in respect of assessee which is exactly matched with the entries recorded in the books of account of the assessee in respect of unsecured loan. Further, mere furnishing of confirmation letter, ledger extract and bank statement is not sufficient enough to come out of the shadow cast upon the assessee and what is required to be proved is genuineness of transactions. In this case, the AO has brought out number of reasons to doubt transactions between the parties, but the assessee failed to file any evidence to contradict the facts brought out by the AO while making addition towards unsecured loan. Therefore, we are of the considered view that the lower authorities were right in making addition towards unsecured loan taken from three companies belonging to Shri Bhanwarlal Jain and hence, we are not inclined to deviate from the findings recorded by the Ld.CIT(A). Accordingly, the ground of app....